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Alliance Resource Partners LP Message Board

  • wareham2620 wareham2620 Oct 6, 2008 12:29 PM Flag

    The Street 10/5/08 page 1

    Q2 0.67
    Q1 0.76
    2007 Q4 0.76
    Q3 0.70
    Q2 0.80
    Q1 0.79
    Q4 0.79
    Q3 0.69
    Q2 0.72
    Q1 0.83
    NA = not available NM = not meaningful
    1 Compustat fiscal year convention is used for all fundamental
    data items.
    Weekly Price: (US$) SMA (50) SMA (100) 1 Year 2 Years
    2006 2007 2008
    Rating History
    Volume in Millions
    COMPUSTAT for Price and Volume, Ratings, Inc. for Rating History
    We rate ALLIANCE RESOURCE PTNRS -LP (ARLP) a BUY. This is driven by a number of strengths, which we
    believe should have a greater impact than any weaknesses, and should give investors a better performance
    opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
    revenue growth, good cash flow from operations and notable return on equity. We feel these strengths
    outweigh the fact that the company has had lackluster performance in the stock itself.
    ARLP's revenue growth trails the industry average of 31.1%. Since the same quarter one year prior, revenues
    slightly increased by 4.9%. This growth in revenue does not appear to have trickled down to the company's
    bottom line, displayed by a decline in earnings per share.
    Net operating cash flow has increased to $84.37 million or 16.59% when compared to the same quarter last
    year. Despite an increase in cash flow, ALLIANCE RESOURCE PTNRS -LP's average is still marginally south of
    the industry average growth rate of 22.41%.
    Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This
    is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas &
    Consumable Fuels industry and the overall market, ALLIANCE RESOURCE PTNRS -LP's return on equity
    significantly exceeds that of both the industry average and the S&P 500.
    ALLIANCE RESOURCE PTNRS -LP's earnings per share declined by 16.3% in the most recent quarter
    compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently.
    We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, ALLIANCE
    RESOURCE PTNRS -LP increased its bottom line by earning $3.05 versus $3.03 in the prior year. For the next
    year, the market is expecting a contraction of 6.5% in earnings ($2.85 versus $3.05).
    Currently the debt-to-equity ratio of 1.53 is quite high overall and when compared to the industry average,
    suggesting that the current management of debt levels should be re-evaluated. Despite the company's weak
    debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.63, which shows the
    ability to cover short-term cash needs.

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